Why Employers Will Continue to Provide Health Insurance: The Impact of the Affordable Care Act

Abstract

The Congressional Budget Office, the Rand Corporation, and the Urban Institute have estimated that the Affordable Care Act (ACA) will leave employer-sponsored coverage largely intact; in contrast, some economists and benefit consultants argue that the ACA encourages employers to drop coverage thereby making both their workers and their firms better off (a winwin" situation). This brief's analysis shows that no such "winwin" situation exists and that employer-sponsored insurance will remain most workers' primary source of coverage. Analysis of three issues-the terms of the ACA, worker characteristics, and the fundamental economics of competitive markets-supports this conclusion.